A

Project Report On

MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN

Project Report Submitted to

Savitribai Phule Pune University

In Partial Fulfillment of Requirement for the Award of

MBA (Finance)

By

Pratik Kamthe

Under the guidance of

Dr. Vijay Dhole

Sinhgad Institute of Business Administration and Research.

2016-2018
 CERTIFICATE

This is to certify that Pratik Balasaheb Kamthe student of SINHGAD

INSTITUTE OF BUSINESS ADMINISTRATION & RESEARCH, Pune has
completed his field work report at Nirmal Bang on the topic of MUTUAL FUNDS IS
THE BETTER INVESTMENTS PLAN and has submitted the field work report in
partial fulfillment of MBA (FINANCE) of the UNIVERSITY OF PUNE for the
academic year 2017-18.

He has worked under our guidance and direction. The said report is based on
bonafide information.

Dr. Vijay Dhole Dr. Avadhoot D.Pol

Project Guide Director

Date:-

Place:-
 Sinhgad Institute of Business Administration and Research, Kondhwa
(Bk.), Pune

Institution Approval Letter

Summer Internship Program

Mr./Ms. Pratik Balasaheb Kamthe of batch 2016-2018 is granted permission by the

institute to do the Summer Internship Project titled MUTUAL FUNDS IS THE

BETTER INVESTMENTS PLAN at Nirmal Bang during May 30-July 30.

Dr. Vijay Dhole Dr. Avadhoot D.Pol

Project Guide Director

Place: Pune

Date:
 ACKNOWLEDGEMENT
I take the opportunity to express my gratitude towards the valuable people who have
contributed towards the successful completion of the project.

First and foremost I would like to thank Mr. Suresh Kumar. (Assistant Vice President at
Nirmal Bang) for giving me an opportunity to work as a summer trainee in Nirmal Bang,
Pune.

I would like to extend my hearty appreciation and thanks to our Director Dr. Avadhoot D.
Pol and also to Dr. Vijay Dhole to give me this opportunity to complete my project with
best guidance.

While doing project we learned many things of Finance this will help me in future.
SINHGAD INSTITUTE OF BUSINESS ADMINISTRATION
AND RESEARCH, KONDHWA (BK)

DECLARATION

I hereby declare that the project titled To study MUTUAL FUNDS IS THE BETTER
INVESTMENTS PLAN is an original piece of research work carried out by me under
the guidance and supervision of Dr. Vijay Dhole . The information has been collected
from genuine & authentic sources. The work has been submitted in partial fulfillment of
the requirement of MBA (Finance) to Pune University.

Place: Pune Signature:

Date: Name of the student

Pratik Kamthe
INDEX

SR NO CONTENT PAGE NO

1 Introduction

2 Objective

3 Methodology

4 Company Profile

5 Literature survey

6 Data presentation

7 Data collection

8 Data analysis

9 Conclusion

10 Bibliography

11 Annexure
 Chapter I
Introduction
INTRODUCTION
Mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all
investors. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and
the capital appreciations realized are shared by its unit holders in proportion the number
of units owned by them. Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost. A Mutual Fund is an investment tool that
allows small investors access to a well-diversified portfolio of equities, bonds and other
securities. Each shareholder participates in the gain or loss of the fund. Units are issued
and can be redeemed as needed. The funds Net Asset value (NAV) is determined each
day.

Investments in securities are spread across a wide cross-section of industries and sectors
and thus the risk is reduced. Diversification reduces the risk because all stocks may not
move in the same direction in the same proportion at the same time. Mutual fund issues
units to the investors in accordance with quantum of money invested by them. Investors
of mutual funds are known as unit holders.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the
assets of the fund in the same proportion as his contribution amount put up with the
corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual
fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as
shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is
defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV
of a scheme is calculated by dividing the market value of scheme's assets by the total
number of units issued to the investors.
HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY
The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the growth
was slow, but it accelerated from the year 1987 when non-UTI players entered the
Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both
qualities wise as well as quantity wise. Before, the monopoly of the market had seen an
ending phase; the Assets Under Management (AUM) was Rs67 billion. The private
sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till
April 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the
Reserve Bank of India and functioned under the Regulatory and administrative control of
the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and administrative control in
place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of
1988 UTI had Rs.6,700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation
of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June
1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund
(Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda
Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set
up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had
assets under management of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
of India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other
schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. consolidation
and growth. As at the end of September, 2004, there were 29 funds, which manage assets
of Rs.153108 crores under 421 schemes.
Mutual Fund Classification:
Mutual funds can be classified as follows:

Based on their structure:

i) Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.

ii) Close-ended funds: These funds raise money from investors only once. Therefore,
after the offer period, fresh investments can not be made into the fund. If the fund is
listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley
Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided
liquidity window on a periodic basis such as monthly or weekly. Redemption of units can
be made during specified intervals. Therefore, such funds have relatively low liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term, thereby
offering higher returns at relatively lower volatility. At the same time, such funds can
yield great capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be considered for a
period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition and
individual stock weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they
invest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some
theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
Balanced fund: Their investment portfolio includes both debt and equity. As a result,
on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the
ideal mutual funds vehicle for investors who prefer spreading their risk across various
instruments. Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively in
fixed-income instruments like bonds, debentures, Government of India securities; and
money market instruments such as certificates of deposit (CD), commercial paper (CP)
and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion
being invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and T-
bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-
pricing between cash market and derivatives market. Funds are allocated to equities,
derivatives and money markets. Higher proportion (around 75%) is put in money
markets, in the absence of arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government
securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure
of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that
of the fund.
INVESTMENT STRATEGIES
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed
date of a month. Payment is made through post dated cheques or direct debit facilities.
The investor gets fewer units when the NAV is high and more units when the NAV is
low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the
same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

RISK V/S. RETURN:

COMPANY PROFILE

Nirmal Bang Group is one of the largest retail broking houses in India, providing the
investors state of art services in capital markets in the country. The Group has
memberships of Bombay Exchange Limited. National Stock of India Limited, Multi
Commodity Exchange of India Limited, National Commodity and Derivatives Exchange
Limited and is also a depository participant of NSDL and CDS (1) L. the depositories of
the country.
they started in 1986 under Late Shri Nirmal Bang as sub brokers hut have grown steadily
and progressively since then. Their clients had contributed tremendously to their growth
they recognize and applaud that, they value their relationship with the customers and for
their convenience had all investing avenues under one roof.

NIRMAL BANG Consultant

As the flagship company of the NIRMAL BANG Group, N1RMAL BANG Private
Limited has always remained at the helm of organizational affairs, pioneering business
policies, work ethic and channels of progress.
NIRMAL BANG believes that they were best positioned to venture into that activity as a
Depository Participant. They were one of the early entrants registered as Depository
Participant with NSDI. (National Securities Depository Limited), the first Depository in
the country and then with CDSL (Central Depository Services Limited). Today it service
over One Lac customer accounts in this business spread across over 350 cities/towns in
India and are ranked amongst the largest Depository Participants in the country, with a
growing secondary market presence. It has transferred this business to NIRMAL BANG
SECURITIES PRIVATE LIMITED (NBSPL). their associate and a member of NSE.
BSE and MDC & NCDEX

NIRMAL BANG Early Days

The birth of NIRMAL BANG was on a modest scale in 1986. It began with the vision
and enterprise of a small group of practicing Chartered Accountants who founded the
flagship company. NIRMAL BANG Securities Private Limited. Ii started with consulting
and financial accounting automation, and carved inroads. Since then. They have utilized
their experience and superlative expertise to go from strength to strength. to better their
services. To provide new ones, to innovate, diversify and in the process.Evolved
NIRMAL BANG as one of Indias premier integrated financial service enterprise. Thus
over the last 20 years NIRMAL BANG has travelled the success route, towards building
a reputation as an integrated financial services provider, offering a wide spectrum of
services. And they have made this journey by taking the route of quality service, path
breaking innovations in service, versatility in service and finally totality in service. Their
highly qualified manpower, cutting-edge technology, comprehensive infrastructure and
total customer-focus has secured for them the position of an emerging financial services
giant enjoying the confidence and Support of an enviable clientele across diverse fields in
the financial world. Their values and vision of attaining total competence in their
servicing has served as the building block for creating a great financial enterprise, which
stands solid on their fortresses of financial strength - their various companies.
With the experience of years of holistic financial servicing behind them and years of
complete expertise in the industry to look forward to. They have now emerged as a
premier integrated financial services provider. And today, they can look with pride at the
fruits of their mastery and experience comprehensive financial services that are
competently segregated to service and manage a diverse range of customer requirements.

Business Focus
The focus of the business is the Customer Customer service. Customer education.
Customer support. Customer relations and last hut not the least Customer acquisition.
Trade execution transparency, timely settlements, risk monitoring and superior service
shall have topmost priority, in the best interests of all concerned.
Vision
TO CREATE VALUABLE RELATIONSHIP AND PROVIDE THE
BEST FINANCIAL SERVICES MOST PROFESSIONALLY

Mission Statement
TO WORK TOGETHER WITH INTEGRITY & MAKE OUR CUSTOM ER FEEL
VALUED

Core Value
RESPECT OUR COLLEAGUE AND THE BUSINESS ITSELF
 Organizational Structure

Nirmal Bang

Branch Franchise

Web Dealer Sales Sales Account Head

Executive Coordinator

Customer Care

Receptionist
 Services

Research Based Investment Advice

Traning and Semenars Investment and Trading Services

EQUITIES

DERIVATIVES

COMMODITIES

Integrated Demat Facility

Technology Based Investment
Tools
KEY PEOPLE

SR NO NAME DESIGNATION

1 Mr. Dilip M Bang Director

2 Mr. Kishor M Bang Director

3 Mr. Rakesh Bhandari

Chartered Accountant
4 Mr. Deepak Agarwal Chartered Accountant

5 Mr. Suvinay Sharma Chartered Accountant

6 Mr. Naresh Samdani Chartered Accountant

7 Mr. Deepak Patel Chartered Accountant

8 Mr. Sunil Jain Chartered Accountant

9 Mr. Anup Agarwal Chartered Accountant

10 Mr. Brijmohan Bohra Chartered Accountant

11 Miss. Monika Bafna Chartered Accountant

12 Mr. Brijmohan Bohra Company Secretary

COMPANIES
NIRMAL BANG Securities Private Limited

Member: National Stock Exchange of India Limited

Member: Bombay Stock Exchange Limited

Participant: National Securities Depository Limited

Participant: Central Depository Service (India) Limited

NIRMAL BANG Commodities Private Limited

Member - Multi Commodity Exchange of India Limited

Member - National Commodities and Derivatives Exchange Ltd

BANG Equity Broking Private Limited

Member - Bombay Stock Exchange Ltd

Nadi Finance &Investment Private Limited

RBI registered Non-Banking Finance Company

Publications of NIRMAL BANG

NIRMAL BANG- Beyond Market

REGISTERED OFFICE

NIRMAL BANG HOUSE

38. Khatau Building, 2nd Floor.

Alkesh Dinesh Modi Marg. Fort.

Mumbai 400 001. Maharashtra

India.

Tel : +91-2264-1234

Fax: +91-3027-2006

Pune Regional Office

NIRMAL BANG

Contact Person: Mr. Suresh Kumar

Assistant Vice President

1202/1/3 Ratnamala, Ghole Road

Shivajinagar Pune -411 004

Landline: 020 66872402

Email: sureshkumr.r@nirmalbang.com
STATEMENT OF PROBLEM
Problems related to the investors.
Problems related to performance.
Problems related to lack of information about mutual funds.

RESEARCH OBJECTIVES
To find out the Preferences of the investors for Asset Management Company.

To know the Preferences for the portfolios.

To know why one has invested or not invested in Reliance Mutual fund.

To find out what should do to boost Mutual Fund Industry.

RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary data collection
was given more importance since it is overhearing factor in attitude studies. One of the
most important users of research methodology is that it helps in identifying the problem,
collecting, analyzing the required information data and providing an alternative solution
to the problem .It also helps in collecting the vital information that is required by the top
management to assist them for the better decision making both day to day decision and
critical ones.

Data sources:
Research is totally based on primary data. Secondary data can be used only for the
reference. Research has been done by primary data collection, and primary data has been
collected by interacting with various people. The secondary data has been collected
through various journals and websites

Limitations of the research

Many are looking for the short term benefits for which sometime mutual fund are not the
best option.

Some people are not ready to invest in mutual fund because of the lack of knowledge
about the product

Time constraint was the major limitation in this project.

 Chapter II

Conceptual Background
REVIEW OF LITERATURE

A mutual fund is a common pool of money in to which investors with common investment
objective place their contributions that are to be invested in accordance with the stated
investment objective of the scheme. The investment manager would invest the money
collected from the investor in to assets that are defined/ permitted by the stated objective of
the scheme. For example, an equity fund would invest equity and equity related instruments
and a debt fund would invest in bonds, debentures, gilts etc.
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized are shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost. The flow chart below describes broadly the working of a mutual fund.
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and the
capital appreciation realized is shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the common man as
it offers an opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost
Concept and Evolution of Mutual Funds in India

As the name suggests, a 'mutual fund' is an investment vehicle that allows several
investors to pool their resources in order to purchase stocks, bonds and other securities.

These collective funds (referred to as Assets Under Management or AUM) are then
invested by an expert fund manager appointed by a mutual fund company (called Asset
Management Company or AMC).

The combined underlying holding of the fund is known as the 'portfolio', and each
investor owns a portion of this portfolio in the form of units.
Why should one invest in a mutual fund?

1. MFs are managed by professional fund managers, responsible for making wise
investments according to market movements and trend analysis.

2. MFs allow you to invest your savings across a variety of securities and diversify your
assets according to your objectives, and risk tolerance.

3. MFs provide investors the freedom to earn on their personal savings. Investments can
be as less as Rs. 500.

4. MFs offer relatively high liquidity.

5. Certain mutual fund investments are tax efficient. For example, domestic equity
mutual funds investors do not need to pay capital gains tax if they remain invested for a
period of above 1year.

TYPES OF MUTUAL FUND SCHEMES

BY STRUCTURE
Open Ended Schemes.
Close Ended Schemes.
Interval Schemes.
1.BY INVESTMENT OBJECTIVE
Growth Schemes.
Income Schemes.
Balanced Schemes.

2.OTHER SCHEMES
Tax Saving Schemes.
Special Schemes.
Index Schemes.
Sector Specific Schemes.

1. OPEN ENDED SCHEMES

The units offered by these schemes are available for sale and repurchase on any business
day at NAV based prices. Hence, the unit capital of the schemes keeps changing each
day. Such schemes thus offer very high liquidity to investors and are becoming
increasingly popular in India. Please note that an open-ended fund is NOT obliged to
keep selling/issuing new units at all times, and may stop issuing further subscription to
new investors. On the other hand, an open-ended fund rarely denies to its investor the
facility to redeem existing units.

2. CLOSED ENDED SCHEMES

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed
number of units. These schemes are launched with an initial public offer (IPO) with a
stated maturity period after which the units are fully redeemed at NAV linked prices. In
the interim, investors can buy or sell units on the stock exchanges where they are listed.
Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains
unchanged. After an initial closed period, the scheme may offer direct repurchase facility
to the investors. Closed-ended schemes are usually more illiquid as compared to open-
ended schemes and hence trade at a discount to the NAV. This discount tends towards the
NAV closer to the maturity date of the scheme.

3. INTERVAL SCHEMES

These schemes combine the features of open-ended and closed-ended schemes. They may
be traded on the stock exchange or may be open for sale or redemption during pre-
determined intervals at NAV based prices.

4. GROWTH SCHEMES

These schemes, also commonly called Equity Schemes, seek to invest a majority of their
funds in equities and a small portion in money market instruments. Such schemes have
the potential to deliver superior returns over the long term. However, because they invest
in equities, these schemes are exposed to fluctuations in value especially in the short
term.

5. INCOME SCHEMES

These schemes, also commonly called Debt Schemes, invest in debt securities such as
corporate bonds, debentures and government securities. The prices of these schemes tend
to be more stable compared with equity schemes and most of the returns to the investors
are generated through dividends or steady capital appreciation. These schemes are ideal
for conservative investors or those not in a position to take higher equity risks, such as
retired individuals. However, as compared to the money market schemes they do have a
higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk.

6. BALANCED SCHEMES

These schemes are commonly known as Hybrid schemes. These schemes invest in both
equities as well as debt. By investing in a mix of this nature, balanced schemes seek to
attain the objective of income and moderate capital appreciation and are ideal for
investors with a conservative, long-term orientation.
7. TAX SAVING SCHEMES

Investors are being encouraged to invest in equity markets through Equity Linked
Savings Scheme (ELSS) by offering them a tax rebate. Units purchased cannot be
assigned / transferred/ pledged / redeemed / switched out until completion of 3 years
from the date of allotment of the respective Units.

The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance (Department of
Economic Affairs), Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the Income-
tax Act, 1961.

8. INDEX SCHEMES

The primary purpose of an Index is to serve as a measure of the performance of the

market as a whole, or a specific sector of the market. An Index also serves as a relevant
benchmark to evaluate the performance of mutual funds. Some investors are interested in
investing in the market in general rather than investing in any specific fund. Such
investors are happy to receive the returns posted by the markets. As it is not practical to
invest in each and every stock in the market in proportion to its size, these investors are
comfortable investing in a fund that they believe is a good representative of the entire
market. Index Funds are launched and managed for such investors.
9. SECTOR SPECIFIC SCHEMES.

Sector Specific Schemes generally invests money in some specified sectors for example:
Real Estate Specialized real estate funds would invest in real estates directly, or may
fund real estate developers or lend to them directly or buy shares of housing finance
companies or may even buy their securitized assets.
ADVANTAGES OF MUTUAL FUNDS
Professional Management.
The major advantage of investing in a mutual fund is that you get a professional money
manager to manage your investments for a small fee. You can leave the investment
decisions to him and only have to monitor the performance of the fund at regular
intervals.
Diversification.
Considered the essential tool in risk management, mutual funds make it possible for even
small investors to diversify their portfolio. A mutual fund can effectively diversify its
portfolio because of the large corpus. However, a small investor cannot have a well-
diversified portfolio because it calls for large investment. For example, a modest portfolio
of 10 bluechip stocks calls for a few a few thousands.

Convenient Administration.
Mutual funds offer tailor-made solutions like systematic investment plans and systematic
withdrawal plans to investors, which is very convenient to investors. Investors also do not
have to worry about investment decisions, they do not have to deal with brokerage or
depository, etc. for buying or selling of securities. Mutual funds also offer specialized
schemes like retirement plans, childrens plans, industry specific schemes, etc. to suit
personal preference of investors. These schemes also help small investors with asset
allocation of their corpus. It also saves a lot of paper work.

Costs Effectiveness

A small investor will find that the mutual fund route is a cost-effective method (the AMC
fee is normally 2.5%) and it also saves a lot of transaction cost as mutual funds get
concession from brokerages. Also, the investor gets the service of a financial professional
for a very small fee. If he were to seek a financial advisor's help directly, he will end up
paying significantly more for investment advice. Also, he will need to have a sizeable
corpus to offer for investment management to be eligible for an investment advisers
services.
 Liquidity.
You can liquidate your investments within 3 to 5 working days (mutual funds dispatch
redemption cheques speedily and also offer direct credit facility into your bank account
i.e. Electronic Clearing Services).

Transparency.
Mutual funds offer daily NAVs of schemes, which help you to monitor your investments
on a regular basis. They also send quarterly newsletters, which give details of the
portfolio, performance of schemes against various benchmarks, etc. They are also well
regulated and Sebi monitors their actions closely.

Tax benefits.
You do not have to pay any taxes on dividends issued by mutual funds. You also have the
advantage of capital gains taxation. Tax-saving schemes and pension schemes give you
the added advantage of benefits under section 88.

Affordability
Mutual funds allow you to invest small sums. For instance, if you want to buy a portfolio
of blue chips of modest size, you should at least have a few lakhs of rupees. A mutual
fund gives you the same portfolio for meager investment of Rs.1,000-5,000. A mutual
fund can do that because it collects money from many people and it has a large corpus.

Definition of Mutual Fund

A mutual fund is an investment vehicle made up of a pool of funds collected from many
investors for the purpose of investing in securities such as stocks, bonds, money market
instruments and similar assets.
 Chapter III
Data Presentation , Analysis and
Interpretation
 ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of Pune

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of Investors 12 18 30 24 20 16
Investors invested in Mutual Fund

35

30

25

20

15 30
24
10 20
18 16
5 12

0
<=30 31-35 36-40 41-45 46-50 >50

Age group of the Investors

Interpretation:

According to this chart out of 120 Mutual Fund investors of Pune the most are in the age
group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs
i.e. 20% and the least investors are in the age group of below 30 yrs.
(b). Educational Qualification of investors of Pune

Educational Qualification Number of Investors

Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120

6%

23%

71%

Graduate/Post Graduate Under Graduate Others

Interpretation:

Out of 120 Mutual Fund investors 71% of the investors in Pune are Graduate/Post
Graduate, 23% are Under Graduate and 6% are others (under HSC).
c). Occupation of the investors of Pune

Occupation No. of Investors

.
Govt. Service 30

Pvt. Service 45

Business 35

Agriculture 4

Others 6

50
No. of Investors

45
40
35
30
25
45
20
35
15 30
10
5
4 6
0
Govt. Service Pvt. Service Business Agriculture Others

Occupation of the customers

Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are
Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.
(d). Monthly Family Income of the Investors of Pune.

Income Group No. of Investors

<=10,000 5

10,001-15,000 12

15,001-20,000 28

20,001-30,000 43

>30,000 32

50
45
40
No. of Investors

35
30
25
20 43
15 32
28
10
5 12
5
0
<=10 10-15 15-20 20-30 >30

Income Group of the Investorsn (Rs. in Th.)

Interpretation:

In the Income Group of the investors of Pune, out of 120 investors, 36% investors that is
the maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000,
Second one i.e. 27% investors are in the monthly income group of more than Rs. 30,000
and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000
(2) Investors invested in different kind of investments.

Kind of Investments No. of Respondents

Saving A/C 195

Fixed deposits 148

Insurance 152

Mutual Fund 120

Post office (NSC) 75

Shares/Debentures 50

Gold/Silver 30

Real Estate 65

65
Kinds of Investment

30
50
75
120
152
148
195
0 100 200 300

No.of Respondents

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5%
people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in
Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver
and 32.5% in Real Estate.
3. Preference of factors while investing

Factors (a) Liquidity (b) Low Risk (c) High Return (d) Trust

No. of 40 60 64 36
Respondents

18% 20%

32% 30%

Liquidity Low Risk High Return Trust

Interpretation:

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to
invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust.
4. Awareness about Mutual Fund and its Operations

Response Yes No

No. of Respondents 135 65

33%

67%

Yes No

Interpretation:

From the above chart it is inferred that 67% People are aware of Mutual Fund and its
operations and 33% are not aware of Mutual Fund and its operations.
5. Source of information for customers about Mutual Fund

Source of information No. of Respondents

Advertisement 18

Peer Group 25

Bank 30

Financial Advisors 62

70
60
No. of Respondents

50
40
30 62

20
25 30
10 18
0
Advertisement Peer Group Bank Financial Advisors

Source of Information

Interpretation:

From the above chart it can be inferred that the Financial Advisor is the most important
source of information about Mutual Fund. Out of 135 Respondents, 46% know about
Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group
and 13% through Advertisement.
6. Investors invested in Mutual Fund
Response No. of Respondents

YES 120

NO 80

Total 200

No
40%

Yes
60%

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in
Mutual Fund.
7. Reason for not invested in Mutual Fund

Reason No. of Respondents

Not Aware 65

Higher Risk 5

Not any Specific Reason 10

13% 6%

81%

Not Aware Higher Risk Not Any

Interpretation:

Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual
Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.
8. Investors invested in different Assets Management Co. (AMC)
Name of AMC No. of Investors

SBIMF 55

UTI 75

HDFC 30

Reliance 75

ICICI Prudential 56

Kotak 45

Others 70

Others
70
HDFC
30
Name of AMC

Kotak
45
SBIMF
55
ICICI
56
Reliance
75
UTI
75
0 20 40 60 80

No. of Investors

Interpretation:

In Pune most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120
Investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47%
in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.
9. Reason for invested in Reliance mutual funds.
Reason No. of Respondents

Associated with Reliance 35

Better Return 5

Agents Advice 15

27%

9% 64%

Associated with SBI Better Return Agents Advice

Interpretation:

Out of 55 investors of SBIMF 64% have invested because of its association with Brand
SBI, 27% invested on Agents Advice, 9% invested because of better return.
10. Reason for not invested in SBIMF

Reason No. of Respondents

Not Aware 25

Less Return 18

Agents Advice 22

34% 38%

28%

Not Aware Less Return Agent's Advice

Interpretation:

Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF,
28% do not have invested due to less return and 34% due to Agents Advice.
11. Preference of Investors for future investment in Mutual Fund
Name of AMC No. of Investors

SBIMF 76

UTI 45

HDFC 35

Reliance 82

ICICI Prudential 80

Kotak 60

Others 75

Others 75

Kotak 60
Name of AMC

ICICI Prudential 80

Reliance 82

HDFC 35

UTI 45

SBIMF 76

0 20 40 60 80 100

No. of Investors

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in
SBIMF, 62.5% in others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.
12. Channel Preferred by the Investors for Mutual Fund Investment
Channel Financial Advisor Bank AMC

No. of 72 18 30
Respondents

25%

15% 60%

Financial Advisor Bank AMC

Interpretation:

Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through
AMC and 15% through Bank.
13. Mode of Investment Preferred by the Investors
Mode of Investment One time Investment Systematic Investment Plan
(SIP)

No. of Respondents 78 42

35%

65%

One time Investment SIP

Interpretation:

Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through
Systematic Investment Plan.
14. Preferred Portfolios by the Investors
Portfolio No. of Investors

Equity 56

Debt 20

Balanced 44

37%
46%

17%

Equity Debt Balance

Interpretation:

From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%
preferred Debt portfolio
15. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend Growth

Reinvestment

No. of Respondents 25 10 85

21%
8%
71%

Dividend Payout Dividend Reinvestment Growth

Interpretation:

From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout
and 8% preferred Dividend Reinvestment Option.
16. Preference of Investors whether to invest in Sectoral Funds
Response No. of Respondents

Yes 25

No 95

21%

79%

Yes No

Interpretation:

Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there
is maximum risk and 21% prefer to invest in Sectoral Fund.
 Chapter IV
Findings, Suggestions and
Conclusion
Findings
In Pune in the Age Group of 36-40 years were more in numbers. The second most
Investors were in the age group of 41-45 years and the least were in the age group of
below 30 years.

In Pune most of the Investors were Graduate or Post Graduate and below HSC there
were very few in numbers.

In Occupation group most of the Investors were Govt. employees, the second most
Investors were Private employees and the least were associated with Agriculture.

Mostly Respondents preferred High Return while investment, the second most
preferred Low Risk then liquidity and the least preferred Trust.

Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not
have invested in Mutual fund.

Suggestions
The most vital problem spotted is of ignorance. Investors should be made aware of
the benefits. Nobody will invest until and unless he is fully convinced. Investors
should be made to realize that ignorance is no longer bliss and what they are losing by
not investing.

Mutual Fund Company needs to give the training of the Individual Financial Advisors
about the Fund/Scheme and its objective, because they are the main source to
influence the investors.

Younger people aged under 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.

Conclusion
Running successful Mutual Funds requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
investors in connection with the preferences of Brand (AMC), Products, Channels etc.

Its observed that many of people have fear of Mutual Fund. They think their money
will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its
related terms. Many of people do not have invested in mutual fund due to lack of
 awareness although they have money to invest. As the awareness and income is
growing the number of mutual fund investors are also growing

Brand plays important role for the investment. People invest in those Companies
where they have faith or they are well known with them.
Annexure
QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.

1. Personal Details:

(a). Name:-

(b). Add: - Phone:-

(c). Age:-

(d). Qualification:-

Graduation/PG Under Graduate Others

(e). Occupation. Pl tick ()

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tick ().

Up to Rs. 10,001 to Rs. 15,001 to Rs. 20,001 to Rs. 30,001

Rs.10,000 15000 20,000 30,000 and above

2. What kind of investments you have made so far? Pl tick (). All applicable.

a. Saving account b. Fixed deposits c. Insurance d. Mutual Fund

e. Post Office-NSC, f. g. Gold/ Silver h. Real Estate

etc Shares/Debentures

3. While investing your money, which factor will you prefer?

(a) Liquidity (b) Low Risk (c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). Yes No

5. If yes, how did you know about Mutual Fund?

a. Advertisement b. Peer Group c. Banks d. Financial Advisors

 6. Have you ever invested in Mutual Fund? Pl tick (). Yes No

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable.

a. SBIMF b. UTI c. HDFC d. Reliance e. Kotak f. Other. specify

9. When you plan to invest your money in asset management co. which AMC will you
prefer?

Assets Management Co.

a. SBIMF

b. UTI

c. Reliance

d. HDFC

e. Kotak

f. ICICI
10. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor (b) Bank (c) AMC

11. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick
().

a. One Time Investment b. Systematic Investment Plan (SIP)

12. Instead of general Mutual Funds, would you like to invest in sectorial funds?

Please tick (). Yes No

Bibliography
BIBLIOGRAPHY

NEWS PAPERS
Economic TIMES
Business Lines
Times Of India

MUTUAL FUND HAND BOOK

Common Sense on Mutual Funds (By John C. Bogle)

Mutual Fund Performance during Up and Down Market Conditions (By Rao, S. P.
Umamaheswar)

WEBSITES

WWW.RELIANCEMUTUAL.COM

WWW.MONEYCONTROL.COM

WWW.ONLINERESEARCHONLINE.COM

WWW.MUTUALFUNDSINDIA.COM